Dubai:
James Hogan, Etihad Airways’ President and Chief Executive, has again looked to refute subsidy allegations against the airline by arguing that financing from its shareholder, the Abu Dhabi government, are loans and equity capital.
Addressing The Aviation Club of the UK in London on Thursday, Hogan said the airline has “always been clear” about the investments it has received from the Abu Dhabi government.
“It [the Abu Dhabi government] was investing in an incredibly capital-intensive industry, one which requires significant investment in the obvious items of aircraft and engines; but one which also requires heavy investment in the less obvious items: people, training, technology, a headquarters building — every single thing had to be started from scratch,” Hogan said, according to an Etihad statement sent to Gulf News.
The US’ three largest airlines, Delta, United and American, allege that in the past ten years Etihad Airways, Emirates and Qatar Airways have received over $40 billion in state subsidies that breach the US’ open skies agreements with the UAE and Qatar. The three US airlines want the US government to renegotiate the open skies agreements with the UAE and Qatar in light of the allegations.
Meanwhile, last December, Europe’s Lufthansa and Air-France-KLM wrote a letter to the European commissioner for transport asking for it to address competition concerns with the Gulf Cooperation Council (GCC), which includes the UAE and Qatar.
The three Gulf airlines have long denied they benefit from subsidies.
“The dark clouds of protectionism are gathering over Europe and the United States … Five mega carriers are trying to pull the ladder up after years of having it their own way. The people that will really lose if these giant legacy airlines are successful are the millions of travellers benefitting from new choice in the global air travel market,” Hogan said.
The investments made by the Abu Dhabi government were rational, Hogan argued, which has seen Etihad become a major long-haul competitor.
Last year, the airline carried 14.8 million passengers and now flies to 111 destinations around the world.
Thursday’s speech in London is the second time in a little over a week where Hogan has addressed the subsidy allegations that are looking to restrict the growth of the three major Gulf airlines. Last week, Hogan spoke at a US Chamber of Commerce aviation event where he also argued that equity capital and loans do not amount to subsidies.
“The airline has always made clear it has received equity investment and shareholder loans, which have been supplemented by $10.5 billion in loans from international financial institutions,” Hogan said last week.
The airline made similar comments last year when the Australian Financial Review (AFR) reported that Etihad had access to a long-term interest free $3 billion (Dh11 billion) loan from the Abu Dhabi ruling family.
